On August 1, ABC Company acquired a real property for P 4,420,000. The shares were selling on the same date at P 125. The fair values are P 800,000 and P 3,200,000 for the land and building respectively.

A mortgage of P 4,000,000 was assumed by ABC on the purchase. Moreover, the company paid P 180,000 of real property taxes in the prior years.

ABC paid legal fees including title search for P 15,000. ABC also paid the local government special assessment for city improvement amounting to P 120,000.

In order to make the building suitable for the use of ABC, remodeling costs had to be incurred in the amount of P 900,000. This however, necessitated the demolition of a portion of the building, which resulted in recovery of salvage material sold for P 30,000.

Parking lot cost the company, P 320,000 while repairs in the main hall were incurred at P45,000 prior to its use.

What is the correct cost of the land?

P1,720,000

P2,535,000

P1,855,000

P1,799,000